Money Matters: The Need for a New Enforcement Approach under the Clean Water Act

Introductory Remarks of Environmental Protection Commissioner Cas Holloway at 2011 Money Matters Summit in Washington D.C., organized by the National Association of Clean Water Agencies

March 1, 2011

Good morning. I’m Cas Holloway, Commissioner of the New York City Department of Environmental Protection, or DEP. On behalf of Mayor Michael Bloomberg, thank you for the opportunity to be here this morning.

Mayor Bloomberg’s PlaNYC recognizes that without clean, plentiful water, dense cities with great transportation networks and low carbon footprints can’t exist. DEP manages New York City's water supply, providing more than 1 billion gallons of water each day from a watershed that extends more than 125 miles from the City, and comprises 19 reservoirs and three controlled lakes. Approximately 7,000 miles of water mains, tunnels and aqueducts bring water to homes and businesses throughout the five boroughs. And we supply water to more than 1 million people outside the City as well.

We also treat 1.3 billion gallons of wastewater every day at 22 wastewater treatment plants—14 in the five boroughs and the rest upstate. Obviously, massive infrastructure is required to supply and treat these volumes, and anyone who has seen our iconic Newtown Creek treatment plant—with its 8 digester eggs and a treatment capacity of 310 million gallons per day—knows that we have plenty of massive infrastructure.

And we are building more. In addition to the $5 billion we are spending to upgrade Newtown Creek, we have a $3 billion water filtration plant under construction in the Bronx, a $1.6 billion ultraviolet disinfection plant under construction in Westchester, and $1 billion of nutrient-removal-related work under way at 8 wastewater treatment plants.

All of this investment, and a lot more—approximately $14 billion between 2002 and today—has something in common: it’s being built in accordance with a schedule established in a State or Federal consent order. When you add in state-of-good-repair work and the funding needed for essential projects like City Water Tunnel No. 3, Mayor Bloomberg has committed more than $19 billion to water and wastewater infrastructure between 2002 and 2010—more funding than went to any other social need, including education and public safety.

Of that amount, less than 1% came through federal grants, and even if you add ARRA funding, grants account for just 1.3% of New York City’s capital funding for water and wastewater infrastructure between 2002 and 2010.

During the same time period, water rates for New Yorkers have increased by 117%, from an average bill of $375 for a family of four, to $816 today. Because consent-order driven schedules have compressed the construction window for the vast majority of this work, rates have increased by double digits in each of the last 4 years—11.5% in 2008, 14.5% in 2009, 12.9% in 2010 and 12.9% in 2011. Timing that couldn’t be worse for New Yorkers—many of whom are seniors on a fixed income—hard hit by the recession. And more increases are projected into the future, to complete mandated work that is peaking now, and new projects that the water and sewer system needs to remain in a state of good repair.

Unless something changes in the Federal government’s approach—a new enforcement paradigm, or a massive infusion of funds for local governments and water utilities—we’re going to see more of the same from Washington, and the State regulators who follow Washington’s lead or risk losing jurisdiction over their water and wastewater infrastructure.

As much as I—and the 835,000 property owners who pay New York City’s water bills—would like a cash infusion, I think that’s unlikely in the current fiscal environment. But a change in the enforcement paradigm is possible if EPA and State regulators are committed to it, with local governments like New York City as willing partners together with environmental groups and other stakeholders.

And EPA Administrator Lisa Jackson and Deputy Administrator Bob Perciasepe—with initiatives like the Green Infrastructure Task force led by Nancy Stoner, and the embrace of Green Infrastructure as a viable way to deal with CSOs—have signaled a strong willingness to move in a new direction.

But without expressly acknowledging that these quantum leaps on the so-called “program” side of EPA must be accompanied by a change in EPA’s enforcement approach, I believe that bold, cost-effective, sustainability initiatives like green infrastructure cannot be more than a passing fad. And that’s an opportunity that New York City, other municipalities, and all of the local utilities here today cannot afford to miss.

The Need for a New Enforcement Approach

A new enforcement approach does not mean no enforcement, or even less enforcement. But it does mean different enforcement. Today local governments and utilities are treated as adversaries; we should be treated as partners. Negotiations start with a presumption of guilt; they should start with a presumption that we share a common interest in protecting the public health of the people we serve, providing clean harbor waters, and running our systems efficiently and cost effectively. Enforcement actions far too often target narrow non-compliance in one program area without solid scientific evidence of meaningful public health benefits, or any cost/benefit analysis, or at the expense of the systematic needs of the entire water and wastewater system.

The narrowness and inflexibility of this approach can be compounded when litigators are brought into the picture. Because enforcement becomes totally segregated from programmatic goals, modifications to an order have to pass muster before a federal judge, and the risk of penalties can be punishing. So a municipality may decide to continue pursuing a timeline that requires inordinate resources to achieve—and comes at the expense of state-of-good-repair work with a much better return, or an investment with far superior public health benefits.

For example, all of the mega-projects DEP has under construction now were bid during the last economic boom, when construction prices in the New York metro area were at an all-time high. As a result, we are paying top dollar on our largest construction portfolio ever—$14 billion of projects in construction or design. A longer timeline and more flexibility could have gotten the same investments done for much less—without any negative impact on public health and the environment.

Of course, there’s another side to this story. Sometimes, robust enforcement is necessary to induce compliance. By some measures, New York City has not always been willing—absent the compulsion of a Federal or State Order—to make water quality investments that are absolutely essential. It’s true that New York Harbor is cleaner than it has been in 100 years—but some might say that that’s largely because Federal and State government, and environmental stakeholders pressed the City to make these investments. While I could certainly counter that interpretation, for the sake of this discussion, I’ll concede those points.

But cities and circumstances change. As the environmental movement has matured and become mainstream – and more and more people live in urban areas – it is clear that the environmental and economic future belongs to those cities that are willing to make the necessary investments. That means all the needs of a modern metropolis—clean water, clean air and energy, affordable housing, open space, and public transportation. All of these needs are elements of Mayor Bloomberg’s groundbreaking PlaNYC. New York City must pursue all of these goals to remain competitive and to provide an economic future for 8.4 million residents, and a million more by 2030.

Following the Mayor’s lead, DEP recently published a comprehensive Strategic Plan, with 100 specific initiatives to achieve clean waters, clean air, and a high quality of life for New Yorkers. The plan seeks to deliver all of this within our existing revenue projections, so that we can keep water rates as low as possible.

Unfortunately, we have no idea if PlaNYC or our Strategic Plan—and the priorities it sets and resources dedicated to it—will factor into EPA’s view of whether DEP is in compliance with the rules and regulations, and whether we are investing enough, in the right places, to change that point of view. This is also true in rulemaking, where seemingly small changes can drive billions of dollars of capital investments—at the expense of the priorities that a local government or utility has set based on our view of what’s needed on the ground. This creates substantial uncertainty—not to mention anxiety—and actually incentivizes inertia and resource hoarding by utilities, rather than long-term strategic thinking, and bold action.

Elements of a New Enforcement Approach

Changing this adversarial, stasis-inducing dynamic will not be easy, but it is certainly possible. A first step could be embracing the idea that consent-order driven enforcement—and the litigation and the penalties that too-often come with it—should be used to compel the unwilling, not as “standard operating procedure.” For localities like New York City that are putting billions into water and wastewater infrastructure; that are funding a Green Infrastructure plan to confront the CSO problem head on; and that have laid out a clear strategy to run a safe and compliant water and sewer system, EPA should be willing to give us the benefit of the doubt. Not every initiative needs to be —or should be—written into a consent order and overseen by a judge.

As front-line service providers, municipal utilities should have the flexibility to exercise professional judgment to balance demands under the Clean Water Act, Safe Drinking Water Act, Clean Air Act, and other programs. And regulators should develop common yardsticks—based on sound science—so that environmental rules achieve tangible public health and environmental improvements across media.

Giving localities the benefit of the doubt means developing flexible remedies that incorporate investments that are planned or are already under way; it means providing the opportunity to understand what EPA’s enforcement priorities are, and how we propose to achieve them—without the threat of a judicial order, or rigid, inflexible milestones that require increased water rates, or major diversions of existing resources. Fundamentally, this requires treating utilities (and cities) as partners in a common effort rather than adversaries, and to the maximum extent possible, deferring to a local jurisdiction’s plan to tackle a problem, as long as we get to the right result.

Put another way, the one-size-fits-all approach that eschews flexible enforcement for rigid adherence to a national standard, should be set-aside. In its place, State and Federal regulators should use all of the tools developed by their program offices to encourage investments that achieve tangible public health and environmental benefits locally. What a West Coast city might need to protect public health and the environment may not be the case in New York City—and vice-versa—regardless of what the Federal Register says.

If the circumstances of a case dictate that an enforcement order is necessary, it should be administrative and easy to modify, and modifications should not be treated as “failures,” or violations, but a part of the process. Such an approach is absolutely essential for green infrastructure to take root as a meaningful way to deal with stormwater, where thousands of installations may be required over a fairly long timeframe to achieve water quality goals. The stakes are high; green infrastructure not only improves water quality, it improves air quality, lowers energy costs, and mitigates climate change. And it could save New Yorkers more than $2 billion in public spending over the next 20 years.

DEP’s Strategic Plan and PLaNYC demonstrate that the City is willing, and has committed massive resources to improving our environment and public health in ways consistent with the goals of national environmental regulation. If we could adapt federal enforcement strategies to complement and reinforce these efforts, we could go a long way towards bridging the gap between federal enforcement, scarce funding, and local goals.

Thanks for the chance to speak. I look forward to continuing this discussion with my colleagues here this morning.